Category Archives: Loot Box (video game gambling)

Casino Watch Focus has long reportedon the ongoing fight to regulate the addictive and gambling-esque gameplay mechanic known as loot boxes. Video games offer boxes that can be purchased for real money and they randomly provide in-game items. These items often have real world value and have certainly been sold as such. Clear links between this and slot machine gambling have been drawn and many are realizing what’s at steak. The issue became a main-stream topic when the Disney’s popular Start Wars franchise was licensed and used by video game publisher EA to make Battlefront II. The loot boxes were a critical component to advancing in the game and it was practically essential from children playing the game to buy these loot boxes to get equipment to be able to compete in the game. The situation was so bad one legislator called the game and Star Wars Themed online casino. After several individual dealings with loot box regulation, including the first actual ban,we now see the first coalition attempting to regulate this new form of gambling to children. Variety explains:

Fifteen gambling regulators from Europe, as well as Washington State Gambling Commission, signed an agreement to work together to address the “risks created by the blurring of lines between gaming and gambling,” according to Gambling Commission It also plans to tackle third-party websites that offer players the chance to gamble or sell in-game items.

Certain countries, like Belgium and the Netherlands, have already taken measures including officially declaring loot boxes as gambling. Those countries even had players unable to open loot boxes in “Counter-Strike: Global Offensive” (CS:GO) due to some players selling rare skins and other in-game items on third-party websites, sometimes for large sums of actual money.

Another measure was taken by popular games selling platform Steam, as Valve removed the ability to trade items in “CS:GO” and “Dota 2” on its platform to comply with gambling regulations in June. However, this will mark the first international combined effort against the concerns of gaming and gambling— which could mean a more intense effort than what individual states have taken.

Neil McArthur, chief executive and signatory of the UK’s Gambling Commission explained the intent behind the effort. “We have joined forces to call on video games companies to address the clear public concern around the risks gambling and some video games can pose to children,” McArthur said. “We encourage video games companies to work with their gambling regulators and take action now to address those concerns to make sure that consumers, and particularly children, are protected.” McArthur further noted that children could be “gambling with money intended for computer game products” using sites that allow users to bet real currency on in-game items. “We want parents to be aware of the risks and to talk to their children about how to stay safe online,” McArthur said.

Such efforts are even more critically important as more and more research is revealing the true cost and risk to our children. It was already reported that the loot box industry is expected to reach $50 billion dollars, but new research is demonstrating exactly what kind of negative effects that can have on children, and given the psychological similarities between gambling and these gaming mechanics, its no surprise the finding point towards a gateway to problem gambling. An online gaming publication reports:

An Australian committee has released the findings of an investigation on loot boxes in video games started earlier this year, reporting that loot boxes and problem gambling are linked and that the monetization practice comes with “a serious risk […] to cause gambling-related harm.”

The debate about loot boxes and their connection to gambling has been raging for quite some time at this point, but the Australian government’s investigation and findings back a growing number of lawmaking bodies and regulatory committees working to impose or encourage regulation of the practice.

In the case of this investigation, and according to information on the study shared by Lexology, researchers looked at a sample size of roughly 7,500 individuals and found “important links between loot box spending and problem gambling.”

The report notes that players with severe gambling problems were more likely to spend large sums on loot boxes in video games, and that its findings suggest that loot boxes can act as a gateway to problem gambling and that the monetization practice itself gives game companies “an unregulated way of exploiting gambling disorders amongst their customers.”

“These results support the position of academics who claim that loot boxes are psychologically akin to gambling,” reads a statement shared along with the findings, shortly after calling back to an earlier quote from the ESRB that likened loot boxes to baseball cards. “Spending large amounts of money on loot boxes was associated with problematic levels of spending on other forms of gambling. This is what one would expect if loot boxes psychologically constituted a form of gambling. It is not what one would expect if loot boxes were, instead, psychologically comparable to baseball cards.”

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Casino Watch Focus has long reportedon underage gambling and risk factors for children exposed to gambling. The NFL came under firefor marketing fantasy football to minors, and they decided to end those efforts. More recently, its been loot boxes in video gamesthat have been so widely discussed. As many have explained, it’s a game mechanic with virtually no difference from gambling, with on legislator outright calling Battlefield II a “Star Wars Themed Online Casino.” Where as Mickey Mouse, the second most recognizable character in the world under Disney was under fire (as they own the Star Wars brand and had to intervene in the loot box situation), its now the world most recognizable character, Nintendo’s Mario, that’s in news. McDonalds made a slot machine toy of Mario in a line of Nintendo themed happy meal toys, and its been called inappropriate by the National Council on Problem Gambling and others. An online source explains:

Today, Jennifer Kruse, Executive Director of the Florida Council on Compulsive Gambling (FCCG), joined the National Council on Problem Gambling by calling upon the toy manufacturer giant, Nintendo® of America, and the fast food industry leader, McDonald’s®, to stop marketing their Slot Machine Super Mario™ toy from McDonald’s® Happy Meals®.

“We were shocked when we noted the slot machine toy in a Happy Meal® here in Florida. Nintendo® and McDonald’s® need to be attentive to the messages their products are promoting among children,” said Kruse. Youngsters are very impressionable and despite the restrictions to gamble among minors, research reveals that adolescents are involved in gambling activities and are at higher risk for developing gambling problems than their adult counterparts.”

“Just because you cannot easily ‘see’ a hazard, does not mean it doesn’t exist. Had the Super Mario™ Happy Meal® toy highlighted a bottle of beer or bloodshot eyes, or had the fantasy character smoking a cigarette, government and others would be up in arms. Unfortunately, we can no longer afford a double standard when research confirms that problem gambling is a growing public health issue, in general, and especially among adolescents, that demands attention now,” concluded Kruse.

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[N]ew loot box bill was introduced in Minnesota this week. The bill joins other state level legislative efforts in the USA, which were introduced since the global loot box debate peaked in the second half of 2017. State Rep. Rick Hansen (DFL-South Saint Paul) introduced the bill H.F. 4460, which “would regulate ‘loot box’ gambling in video games”. The matter was discussed and both parties spoke in favor of the bill. According to Rep. Hansen “People are spending real money on random drawings in video games. Minnesota regulates gambling and when loot boxes meet the threshold to be considered gambling, then we need to treat it as such and regulate it too.”

The bill prohibits the sale of a “video game containing a system that permits the in-game purchase of (1) a randomized reward or rewards, or (2) a virtual item that can be redeemed to directly or indirectly receive a randomized reward or rewards to a person under 18 years of age” [sic].

Additionally, no video game may be sold or provided unless accompanied by a warning stating: “Warning: This game contains a gambling-like mechanism that may promote the development of a gaming disorder that increases the risk of harmful mental or physical health effects, and may expose the user to significant financial risk.” For games sold through electronic means, the warning must be acknowledged by the purchaser.

The Minnesota bill has a long way to go before it becomes binding legislation, as do most of the domestic bills discussed recently. However, several foreign government have passed and implement regulations including outright banning loot boxes from video games. The online European source The Verdict explains:

Belgium has followed the Netherlands in banning the sale of loot boxes in video games, as Europe begins to crack down on what it deems to be illegal gambling operations run by major game publishers. Speaking to /Verdict/, a Belgian Gaming Commission spokesperson said: “The Belgian Gaming Commission has come to the conclusion thatreal-money loot boxes are gambling. This means that in Belgium, these types of games are prohibited unless licensed.”

If they do not adapt their games, they all potentially face criminal prosecution. Punishments would include up to five years in prison and fines of up to €800,000, which could be doubled if it is found that minors were involved.

It is highly likely that this would be the case. Approximately 22% of video gamers are aged between ten and 20 years old according to Statista, which is largely the cause of the Belgian Gaming Commission’s concerns. The Belgian Gaming Commission added:

“Real-money loot boxes are not innocent. Especially because the video games that they appear in are often played by children. “The Gaming Commission wants to protect the players in general and vulnerable groups (e.g. minors) in particular.”

Despite all these bans and all the discussion of how loot boxes are gambling and harmful to children, publishers don’t seem to willing to stop such predatory practices. EA, the publisher whose Star Wars video game Battlefront started this backlash, has been the most vocal about their inability to part from this gaming mechanic. The Verdict continues:

The loot box debate has been going for some time, but the bans issued by the Netherlands and Belgium are the first sign that governments are beginning to take notice. However, at least for the time being, publishers are unlikely to be too concerned.

Tom Wijman, market consultant at video game research company Newzoo, told Verdict: “I don’t expect publishers to be too worried, it should be quite simple to turn the option for loot boxes off for Belgian and Dutch bank accounts, and those markets are pretty small compared to the United States or UK.”

EA stated that it disagrees with Belgium’s ruling. A company spokesperson told /Verdict/ that the company welcomes discussions with Belgian authorities, but did not confirm whether it intends to comply with the request to remove these items from its games. EA CEO Andrew Wilson has since told industry analysts that the company plans to continue pushing forward with services such as Fifa Ultimate Team, which generates vast revenues through the sale of loot box items known as player packs.

For now, the issue is more of a nuisance than a problem for game publishers, but it could get worse if other regulators decide to follow Belgium’s lead. “I think the significant part about these bans isn’t so much theNetherlands and Belgium banning loot boxes, but rather the messagethis sends to regulatory institutions for gambling worldwide,”Wijman added. Should other countries issue similar bans, the attack on loot boxes could prove costly for developers.

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Casino Watch Focus has reportedon the ongoing battle by legislators and video game companies over the highly controversial loot box mechanics that many see as out right gambling being marketed to children and older gamers alike. Its now being reported that revenue generating from micro transactions in video games could almost double over the next four years. An online investment source explains:

A new study from Juniper Research forecasts that loot boxes and skins gambling, two emerging gaming growth sectors, will reach a total spend of $50 billion by 2022, up from under $30 billion this year. Loot boxes are in-game packs which contain a random selection of items; while skins are in-game cosmetics which change the appearance of weapons or characters.

The new research, Daily Fantasy Sports & In-game Gambling; Skins and Loot Boxes 2018-2022, found that skins gambling should be of great concern to regulators. Frequently utilized as virtual currency for betting, skins are then cashed-in for real money via online trading platforms.

Research author Lauren Foye explained: “Skins are acquired both through playing video games and from opening purchased loot boxes. These items have value depending on rarity and popularity within game communities. On PCs, skins are traded for real money via Steam’s ‘Marketplace’; the platform has 125 million registered users globally.”

These grown numbers are especially troubling when one understands just how prevent these transactions are accessible by children. In the US, many legislators have taken notice and started discussions and legislation formation to address the issue. In the UK, the amount of kids identified as having already participated in skins gambling is beyond troubling. The article continues:

A 2017 study by the Gambling Commission found that 11% of 11-16 year olds in the UK had placed bets with skins; meaning around 500,000 children under the age of 15 could be using skins for gambling. Juniper finds skin gambling risks being pushed underground; without further counter-measures, wagers will surpass $1 billion globally by 2022, a fifth of the global market seen prior to Steam’s interference.

Juniper strongly recommends regulation for skin trading and gambling, in an attempt to both prevent youth participation and remove malicious actors who run sites which steal skins or short-change users.

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Casino Watch Focus has reportedon the ongoing issue of loot boxes in video games. Many seek to label them as gambling and want to see the appropriate regulations in place. The game that brought the issue to light was a Disney owned property, Star Wars and the game EA produced, Battlefront II. Hawaii legislator Chris Lee candidly referred to the game as an online, Star Wars themed casino, designed to take kids money. Since the issue has become more clearly understood, more legislators have pressured the industry for the appropriate protections moving forward. Most recently, US Senator Maggie Hassan wrote an open letter to the ESRB, the video game self-regulator body, asking them to address the issue before bodies like Congress had to step in to offer protection. The ESRB finally released a statement outlining a new policy, and it should come as no surprise that their recommended actions do absolutely nothing to protect consumers or adequately inform parents as to the dangers of loot boxes, or even to their inclusion in games for that matter. Forbes very precisely breaks down the situation and comments from Sen Hass demonstrates why the ESRB’s suggested policy action wont advance protections in any meaningful way:

The ESRB made an announcement yesterday that it will now start labeling games that sell loot boxes. The problem? It will also be labeling games that sell /anything/, loot boxes, microtransactions, boosts, even DLC, using one, catch-all “In-Game Purchases” label.

The issue that was immediately pointed out by everyone was that nearly every game on the market contains “in-game purchases” in 2018, so this will be a sticker slapped on pretty much all titles, barring perhaps some indies. Hassan herself even saw this as a pretty obvious dodge, saying this after the announcement was made:

“While today’s announcement of the creation of a new ‘In-Game Purchases’ label and the ESRB’s response to my letter are a positive step for parents and consumers, I am still concerned by the ESRB’s skepticism regarding the potentially addictive nature of loot boxes and microtransactions in video games. I will work with all relevant stakeholders to continue oversight on these issues and ensure that meaningful improvements are made to increase transparency and consumer protections.”

The ESRB very clearly understood that people would see through such meaningless actions, so they attempted to preemptively address everyone’s criticism. As Forbes points out, their response was nonsense and it’s incredibly obvious that the industry won’t be attempting to address the issue unless legislative bodies like Congress force them to protect children from this form of gambling:

The ESRB anticipated that it would get flack for not targeting loot boxes specifically with this move, and president Patricia Vance said this in its defense:

“I’m sure you’re all asking why aren’t we doing something more specific to loot boxes,” Vance said. “We’ve done a lot of research over the past several weeks and months, particularly among parents. What we’ve learned is that a large majority of parents don’t know what a loot box is. Even those who claim they do, don’t really understand what a loot box is. So it’s very important for us to not harp on loot boxes per se, to make sure that we’re capturing loot boxes, but also other in-game transactions.”

This is, of course, nonsense. While the ESRB is setting up a site to better educate parents on in-game spending in addition to this new “in-game purchases” sticker, the point is that the ESRB is totally ducking the real issue here. They still want to get /nowhere/ near declaring loot boxes gambling and doing something drastic like making all loot box-infused games M or AO rated, so this is their incredibly phoned-in compromise.

To me, this is about as useful a gambling regulatory body (run by the casinos, not the government) informing you that a stay at a casino will cost you money, but without differentiating between spending cash on food, blackjack, drinks, poker, hotel rooms or slot machines. Kids can order food and drinks and stay at the hotel, but they can’t gamble for obvious reasons. But the ESRB with its new system is lumping /all/ forms of spending together in a way that is bound to do nothing but confuse parents even further, obscuring the real issue.

It is absolutely absurd that the ESRB is creating a system that would group something like /Horizon Zero Dawn/’s Frozen Wilds [Downloadable Content (DLC)] in with something like /Battlefront 2/ loot boxes. This “solution” is totally glossing over the crux of the issue, which is not that players are able to spend money past the $60 asking price of a game, but that /the way/ in which they’re asked to spend money has often been honed by psychologists to ensure it’s as addicting, if not more so, than traditional gambling. But the ESRB is not touching that with a ten foot pole, relying on the old argument that since nothing of “actual value” is won during this gambling because the items are digital, that it isn’t gambling at all. And yet there is nothing psychologically addictive about wanting to buy DLC for a game you’ve purchased, while there certainly is for players, often children, that are spending dozens, hundreds, or thousands of dollars on randomized, slot-machine-like loot box rewards across the majority of releases today.

So yes, the ESRB did something that is essentially nothing, and it’s clear they’re not going to be a player in this fight unless legislation forces them to change their tune.

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Casino Watch Focus has reported on the discovery and evolution of gambling-esque loot boxes in video games and the legislative response to such predatory practices. Loot boxes are a type of micro-transaction where a video game player spends real money to open a box or chest in a video game, and hopefully win a valuable prize. If this sounds an awful lot like slot machines, then you’re thinking the same as countless fans, journalists and now legislators that are worried about he addictive and predatory nature of such a mechanic, especially when kids freely play these games. Hawaii legislator Chris Lee has lead the charge to hold the video game accountable and many others have taken note. As promised, Hawaii has now released 4 new bills that seek to regulate these predatory micro-transactions. An online source reports:

Four new bills have been introduced in the past month that target the sale of games that sell loot boxes for real money. Two of the bills would prohibit developers from selling games with randomized loot box reward systems to anyone under the age of 21. The other two would require developers to label games that use randomized loot box systems /and/ to disclose loot box drop rates.

Developers would be forced to label games should they include “in-game purchases and gambling-like mechanisms which may be harmful or addictive,” according to the bill. A game purchased online would have to include this information on the game’s art.

“Whistle-blowers have revealed that psychologists are employed to create these mechanisms,” Lee told the Hawaii Tribune. “If enough of the market reacts, the industry would have to respond and change its practices.” Lee said that more than half of the states in the United States are looking intro legislation regarding the sale of loot boxes in video games. Loot box regulation has already begun overseas as well. In 2016, China passed legislation that requires all developers to publish its loot box odds. Likewise, the Belgium Gaming Commission has deemed loot boxes “dangerous.”

Lee has been pushing the industry to impose its own common sense legislation. The ESRB is the rating system used within the industry and as of now, they are unwilling to view loot boxes as gambling and thus, they haven’t been willing to take the matter seriously or regulate from within. During a normal public meeting about the bills, lobbyist from the Entertainment Software Association, the industries trade group and regulators of the ESRB rating system, flew out to participate in the Q&A. They were unable to answer, justify or address some of the most basic concerns raised by Lee. It was objectively a very terrible showing for the industry. You can find the full video and update on Lee’s direct YouTube channel HERE (Loot box update begins at 2:37 and the questioning begins at 7:00).

Moreover, in addition to large number of states that are looking into similar legislation, these predatory gambling practices have now caught the attention of the US Senate, specifically Senator Maggie Hassan. She has questioned the FTC and wrote a letter directly to the ESRB. Forbes reports:

This week, Hassan asked four FTC nominees the question: “That children being addicted to gaming — and activities like loot boxes that might make them more susceptible to addiction — is a problem that merits attention?” To which all four responded yes, it was something they would look into. But past that, Hassan wrote a lengthy letter to Patricia Vance, president of the ESRB citing that the issue of loot boxes was brought to her attention by a constituent.

“While there is robust debate over whether loot boxes should be considered gambling, the fact that they are both expensive habits and use similar psychological principles suggest loot boxes should be treated with extra scrutiny,” Hassan’s letter says. “At minimum, the rating system should denote when loot boxes are utilized in physical copies of electronic games.”

The fact that Hassan is a US Senator, not a state senator, is important, as this could end up leading to her proposing federal legislation about this issue, rather than individual states doing it.

Casino Watch Focus has reported on the ongoing revelation that video game publishers are pushing what many have called predatory gambling mechanics into recent video games. These loot boxes that are purchased by a gamer dispense in-game items by chance. The players don’t know what items they are actually purchasing and thus they chase after the change of getting the good loot much like a gambler chases after the right combination in a slot machine. What’s worse, publisher EA used these gambling boxes as the primary way to advance through their latest Star Wars video game, Battlefront 2. Naturally, this not only caught the eye of the media, but Disney themselves had to step in. Then governmental agencies started investigating and expressing concern for such psychologically manipulative mechanisms in video games that are available to children. Chris Lee, a Hawaiian legislature pulled no punches when he categorized the game and loot boxes as simply an Star Wars themed online casino aimed at taking kids money. Apple called for companies to disclose the odds of obtaining various loot in any games sold in there app store, but the industry as a whole decided not to regulate loot boxes through the ESRB system. Given the lack of sell governance, yet another state has pushed forward to investigate the issue. The Rolling Stone reports:

As the debate surrounding loot boxes and microtransactions as a form of gambling targeted at children continues, a new bill proposed in Washington is looking to force the game industry to regulate these mechanics, The News Tribune reports.

Washington State Senator Kevin Ranker introduced a bill this month asking state officials, as well as game developers, to determine once and for all if loot boxes and similar mechanics are specifically designed to prey on children.

“What the bill says is, ‘Industry, state: sit down to figure out the best way to regulate this,’” Ranker told the outlet. “It is unacceptable to be targeting our children with predatory gambling masked in a game with dancing bunnies or something.”

Despite the controversies, the game industry seems to be fully-committed to loot boxes and microtransactions. In a recent industry survey, the Game Developer’s Conference found one in 10 developers plan to implement the mechanics in their next game.

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